As big corporations look for drastic ways to cut carbon emissions from business travel, airlines are preparing for great success with business travel in business class, a major revenue driver, say industry leaders and experts.
Several companies including HSBC, Zurich Insurance, Bain & Company, and S&P Global have already announced plans to quickly cut business travel emissions by up to 70%.
Some are considering a “carbon budget” as they are under increasing pressure from environmentalists and investors to reduce indirect emissions that contribute to climate change.
Flights account for around 90% of business travel emissions. That makes it the least hanging fruit for companies setting reduction targets.
The aviation industry pledged at a meeting in Boston last week to achieve “net zero” emissions by 2050, decades above targets of reducing emissions from corporate travel. “It’s going to be tough for the airlines and they have to adapt,” says Kit Brennan, co-founder of London-based Thrust Carbon, which advises S&P and other customers on setting carbon budgets.
“I think what we are going to see, funnily enough, is more of a business class unbundling where you get all the benefits of business class without the seat,” he said, referring to airport lounges and better meals.
According to a study by the World Bank, the flying business class emits around three times as much CO2 as the economy class because the seats take up more space and more of them are empty.
Change already in progress
Before the pandemic, around 5% of international passengers worldwide flew in premium classes, which, according to the IATA airline group, accounts for 30% of international sales.
The pandemic-related decline in travel and the switch to virtual meetings have prompted many companies to save money by revising their travel guidelines.
Sam Israelit, chief sustainability officer at consulting firm Bain, said his company is evaluating carbon budgets for offices or practice areas to reduce travel emissions per employee by 35% over the next five years.
“I think, more generally, it’s something companies really have to start with if they are to successfully achieve the aggressive goals everyone is setting,” he said.
Businesses and travel agencies are also investing heavily in tools to measure flight emissions based on factors such as aircraft type, flight route and class of service.
“We don’t see many companies taking a very draconian approach like simply reducing travel because it affects their bottom line,” said Nora Lovell Marchant, vice president of sustainability at American Express Global Business Travel. “But we see an increasing demand for transparency so that these travelers can make decisions.”
Global rating agency S&P, which plans to reduce travel emissions by 25% by 2025, found that 42% of its business class usage was used for in-house meetings, its global leader in business travel, Ann Dery, said at an event hosted by the CAPA Center for Aviation im last month.
Airlines are going green
The US airline JetBlue plans to sustainably produce around 30% of its kerosene for flights to and from New York within two to three years. “Companies will naturally want to tackle this issue of climate change aggressively,” said Robin Hayes, CEO of JetBlue, on the sidelines of the meeting in Boston. “But we think they can do this in a way that still makes business travel possible.”
The emissions target that the airlines set last week is based on increasing the consumption of sustainable aviation fuel from less than 0.1% today to 65% by 2050 and on new engine technologies.
“If we achieve net zero carbon emissions by 2050, everyone must do their part,” said Greg Foran, chief executive of Air New Zealand. “It’s not just the airlines. It will be fuel providers, it will be governments.
(Reporting by Jamie Freed in Sydney and Rajesh Kumar Singh in Boston; Editing by Miyoung Kim and Gerry Doyle)